Yahoo, VMware, EMC drive down techs

Shares tumble on earnings results; Apple gains on new iPad news

SAN FRANCISCO (MarketWatch) — Big losses from VMware Inc., EMC Corp. and Seagate Technology weighed on investors’ sentiments Tuesday as the tech sector went into the red following a round of disappointing reaction to those companies’ earnings reports and outlooks.

VMware
VMW, -1.17%
led the decliners, as the enterprise software company’s shares fell more than 21% to $77.14 by the closing bell. At least four Wall Street analysts cut their ratings on VMware after the company reported on Monday fourth-quarter results that were essentially in line with estimates, but gave a weaker-than-expected first-quarter sales forecast.

Reuters

Yahoo shares slipped Tuesday following its fourth quarter results.

VMware also said it would cut 900 jobs and take a charge of between $90 million and $110 million for costs associated with the job cuts and exiting of certain business areas.

EMC
EMC, +0.16%
was down by more than 4%, at $24.18 a share, mostly due to guilt by association with VMware, as EMC owns a majority stake in the company. Prior to the start of trading, EMC reported earnings, excluding one-time items, of 54 cents a share, on revenues of $6 billion, while analysts had forecast EMC to earn 52 cents a share on $5.98 billion in sales.

Seagate
STX, -1.98%
saw its shares fall more than 9%, to $33.91. Late Monday, the hard-disk drive maker reported second fiscal-quarter earnings that fell 13% from a year ago, and gave what was seen as a conservative third-quarter outlook.

Rob Cihra, an analyst with Evercore Partners, cut his rating on Seagate’s stock to equal-weight, or neutral, from overweight, mostly due to valuation matters.

Lexmark International Inc.
LXK, -1.83%
shares gave up more than 15%, to close at $23.74. Before the market opened, the printing technology company reported a fourth-quarter profit, excluding one-time items, of 61 cents a share, on revenue of $968 million. Analysts had forecast Lexmark to earn 90 cents a share on $934 million in sales.

Lexmark also forecast first-quarter earnings of 80 cents to 90 cents a share, and sales that are expected to fall from 11% to 13% from a year ago.

Internet radio company Pandora Media Inc.
P, -1.10%
gave up 2%, to fall to $11.36 a share. Wedbush Securities analyst Michael Pachter cut his rating on Pandora to neutral from outperform, mostly due to the stock’s valuation, as Pandora’s shares have climbed more than 60% over the last two months.

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BMC Software Inc.
US:BMC
added to the tech sector’s decline, as its shares fell more than 6%, to $41.71. The business-software company reported a sharp drop in its fiscal third-quarter earnings and cut its forecast for the fiscal year. Gregg Moskowitz, and analyst with Cowen & Co., cut his rating on BMC’s shares to neutral from outperform.

One of the few gainers was Apple Inc.
AAPL, -1.54%
which rose 1.9% to $458.27. On Tuesday, Apple said it would begin selling a new model of the iPad that comes with 128 gigabytes of storage, or double the storage capacity of the largest current iPad version. The newest iPad will cost $799 for a WiFi-only model, or $929 for one that connects with cellphone networks.

With the tech sector leading the day’s losses, the Nasdaq Composite Index
COMP, -0.94%
fell by a fraction to 3,154. The Philadelphia Semiconductor Index
SOX, -1.17%
and the Morgan Stanley High Tech 35 Index
MSH, -0.78%
also retreated.

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